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Mad Money

News/Business. (2013)

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01:00:00

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480

TOPIC FREQUENCY

S&p 11, Berry 9, Brodin 9, Cramer 4, Dupont 3, Bemis 3, Jim 2, Jim Cramer 2, Stephanie 2, Florida 2, California 2, Us 2, Verizon 2, Harbaugh 2, Johnson 2, Geico 2, Dana 2, At&t 2, Indiana 1, Kraft 1,
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  CNBC    Mad Money    News/Business.  (2013)  

    January 22, 2013
    11:00 - 12:00am EST  

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i'm jim cramer and welcome to my world. you need to get in the game. firms are going to go out of business and he's nuts. they are nuts. they know nothing. i always like to say there's a bull market somewhere. "mad money," you can't afford to miss it. hey, i'm cramer, welcome to "mad money". welcome to cramerica. other people want to make friends. i just want to help you make money. my job is to teach, educate and coach, so call me. verizon looks good. no, it's terrible. dupont better than expected, or
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is it? this week started off with the dow advancing 4.72%. i know companies and i know what to look for. kurt i'm invested in every single dow stock. when the biggest and well-known companies report the process is still mystified. i have to tell you what, this morning verizon reported, company sends a release because it is so important, whether it be the hook ups or the subsidies for smartphones, this quarter is immensely important. i shoot stephanie link an e-mail that says that i think it is
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all systems go. stephanie comes back instantaneously, she is focused on it too. writing, 7% hit from sandy, big wireless numbers. the stock is down 30 cents. so i renew my efforts. find me something, what is wrong with verizon. i don't see it. find me what is wrong. nothing. just the questions of the margins. it is kind of unknowable. and then i'm over across the street. it was a much worse than expected quarter. >> verizon eps misses, reads the
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tombstone. so it's natural when the gang at squawk comes at me and ask what i thought of a rise in. i don't know. nothing wrong i can see. it is fine. and earnings season, fine doesn't cut it. the stock is either great or bad. it's either a buyer or a cell and a shortfall is bad. all of this, mind you, is coming in a total vacuum, and what verizon is going to say about the margins, what's left after the cost of selling the goods, we don't know. yet the stock is trading heavily and all down hill. so i guess it's a really bad. i pretty much intimate that by the time our morning show begins. i'm beaten down. and taken to the canvas defending this horizon. no sooner do i embrace the negative action than the stock starts to trade higher, into positive territory. we actually had answers. the cfl has told the people on the earnings conference call that i can't here because i'm doing a show that the company is
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confident the margins will improve in 2013. wireline looked to be a dragon, and wireless bounced back rapidly after heavy cell phones sales the year before. cell phones as you know if you bought one from verizon are heavily subsidized. knocks down the earnings for verizon, bangs the margins down. after all that, verizon starts trading higher rate from the get go and stays higher the rest of the day, going out at $0.40. it was a huge one bay moved for the stocks considering the shortfall. how about johnson and johnson? the earnings are definitely better than expected. $1.19 versus $1.16. wait a second, the guidance is over but the street is at $5.49. the stock starts sinking like a stone. the thing is just incredible. down $0.80 from friday's close. this is a big dallas stock. j and j is not going higher without apple going lower. for me it's a great story. the guidance really doesn't play
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a big role. sure enough we learned j and j is exploring options, code for sale, and it flashed back to where it was friday. if you bought the stock on the weakness and flip it when you heard about the split off you could've done just fine. best and wildest for last. dupont, which had so disappointed last quarter, it came out with a stellar $0.11 a number versus the $0.07 b street was expecting. looked like a major comeback. ♪ hallelujah >> i got the text. i was worried about titanium dioxide, the white center you put in toothpaste and paint. it boosted earnings for so long when supplies were tight but it collapsed when chinese demand diminished and to many factory started pumping out the white stuff. dupont's looks real bad. a shot at over to stephanie link. dupont is an action alerts plus name. she told me stop it, stop
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worrying because we don't know what the forecast for the commodity is going to be and we won't know until the conference call. no, i want to know. we can't know. well, ceo, happy birthday ellen coleman, appears on our own squawk box and says i think, meaning i, 2013 is setting up to be a cautious year. the question is how will the u.s. economy respond. now i'm like you are about to lower the boom on 2013, how could you do that. she goes on to say we've taken good steps around the debts but the deficit has to be dealt with and it needs to be dealt with in a matter of months. oh golly. down goes dupont in pre-market trading. within a few minutes she tells me that all anyone is focused on is the country is doing pretty darned good especially in latin america. with that commodity in question, a stock that had been sinking now reverses and ends up flying
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up as it should have won the earnings were first reported. one of the best performing stocks in the dow. again, a huge move for this one. believe me, if these were just isolated examples i would be fine with them, but they are par for the course and there are so many better like this, you can see what i regard all this trading off the headlines, without people really looking, to be fraught with calamity and chances for you to lose money with almost every twist and turn. i sure liked the look of ibm and google earnings and i love the way the stock traded after the close, but until i hear the conference calls myself i am not going to pronounce them as terrific as the after-hours trading would indicate. you might want me to but i'm going to say no. after this morning how could you blame me for not wanting to pull them apart myself? do the analysis myself, even as
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i like both stocks my charitable trust has a sizable position in ibm. it is not idle chatter when i tell you that these couple weeks averting season are the worst times of year to try to make money. it's because of the tsunami of information coupled with the need by traders to trade every single day point even if they are meaningless or even robbed. remember the cases of verizon, j and j and dupont. listen before you take any action, that is if there is any action to be taken at all. david maryland. >> hello, jim cramer. big, fat a baltimore ravens superbowl of brianna. >> i've got to hand it to you, i like harbaugh. i think harbaugh is great. >> as we all know by now, at&t and verizon both announced they're going to record huge charges related to their pension obligations. i believe they did the exact same thing last year. as a longtime investor in at&t, how concerned should idea about
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this? >> this is a bird hanke function. but you have these rates real low there's not much you could do. the answer is we're not going to take it into a factor. it's not what we should be trading off of. it's not what we should be investing off of. here is the watchword for earnings season. stop, look, listen. that our motto. there's too much noise out there. it leads to the wrong way and you end up losing your money. that's not okay on my watch "mad money" will be right back. . coming up, as the market hits new five year highs, cramer is finding out if the bulls can continue their stampede when he goes off the charts and later, take over target. 2013 kicked off a slew of acquisition announcements. can the urge to merge make money this year? it could be the missile you need to sky rocket higher. plus packaging power.
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food, fashion, phones whatever you consume comes in paper and plastic. two names you never heard of. find out which one could have profits perfectly wrapped. just ahead. coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. tweet cramer #madtweets. send jim an e-mail to madmoney@cnbc.com or call us. miss something? head to madmoney.cnbc.com. ♪
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day after day we are being blown away by this market. tell the truth. the thing simply won't quit. somehow this market keeps taking out its highs when people are being made incredibly bearish and worried. we have to ask ourselves what is going on here? come on. i look at charts. break out, break out, break out,
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break out. tonight we are going off the charts to see what is going on. carolyn borodin, this woman is a fabulous technician who happens to be my colleague at thestreet.com. although after the calls she's made of late, she belongs in buckingham palace. she has nailed this market. over and over again she has gotten the direction right, with a level of accuracy i find down right disturbing. she called the top back in september and told us she was drawing a line in the sand and if the s&p dropped we would get pounded. sure enough it fell after the election and we did get pummeled. but what most impressed me was what she told us on november 20th, when everyone began to freak out at that moment, at that chicken little moment, when
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all the worrywarts were out in full force, she told us to stop worrying. the s&p was ready to rally. she sent me this, holy cow, this is out of sync with what we were thinking. at the time. the s&p is at 1387. now it is at 1492. in short, brodin nailed a 100 point move in the s&p in two months. what a great grab. look at that. she nailed that. i might not be a chartist, but the charts don't have emotions. they aren't about the fiscal cliff or the debt ceiling or the election. it is totally working this market. so i have to go back to the mathematical well. what can i tell you, we want to
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know what the queen thinks it could go next. take a look at this chart. the s&p said it would. and shortly thereafter she told us that the low was likely to be pivotal, as a key part of her methodology. you heard me talk about fibonacci ratios. these numbers are 23.6%. 38.2%. 50 % and 69.1%. it is eerie and according to many technicians it is a crucial turning point in price targets. and you apply the ratios that i mentioned and there is always an important level for that security. based on that low the s&p was ready to roar and she gave us a price target of 1510.
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last time we highlighted her work she said that if the s&p could break out it would be a straight line straight shot to her 1510 target. sure enough, i went back to her for info. so what does she think about the s&p prospects right now? since it took out the key high it made on december 18th before the big end of the year sell off, brodin thinks we might need a new higher upside target. if it breaks out above 1510, and right now she thinks that is very likely then she said the next stop could come in the next stop could come in the 1551 to 1555 area. we would be going like this, okay? why there. that is the next level, which is the key to brodin's method.
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june 4th low, 100%, to september 14th, that gets you to 1551. and 161, remember these are the numbers, 161.8% extension of the swing to the mid november low that would take it to the high. all right. brodin sees the next step higher as being somewhere in that area. she nailed this, she nailed this and this. i don't know. cut anyway, hey, it is something that came into my head. it was not meant to be sexist. it came into my head. things happen like that. if you check out the weekly chart. people think i'm brent musburger here. check out the weekly chart,
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brodin sees even more fibonacci relationships that overlap with her new price target. there are price relationships running from 1551 to 1563. now brodin says that sometimes these clusters can work as a magnet for the price of the security. the s&p can be drawn to the levels in one place. that said, brodin recognizes that this market has had a major run. so she wouldn't be surprised at all if we get a healthy pullback. the next stop is 1555. i like her bullish surety. if we have one of these sell offs, we have a buy, buy, buy. if the s&p breaks down below the
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critical low it made in mid-november, but, you know, i got to tell you, i'm sorry, that would be almost a 10% decline from where we are right now. as long as the s&p holds above that level, we're going to 1510 and beyond. there are a lot of doubters but the market won't quit. and if you believe the charts as in interpreted as brodin, it could have an upside before the market is done. brodin has gotten the tricks and turns of the market right so many times that i have to give her some serious credence and kudos. after we get to 1510, next stop 1555. what a run that could be. after the break i'll try to make you more money.
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>> coming up, takeover target? 2013 kicked off a slew of acquisition announcements. can the urge to merge make you money? don't miss cramer's play. it could be the missile you need to skyrocket higher.
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now that we are almost a month into 2013 i think one of the big trends for the new year
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will be an uptick in m and a activity. we've got a world where growth is much harder to come by. meanwhile companies are sitting on gigantic piles of cash. if they want to grow, the easiest way to do it is by making acquisitions. i'm on the lookout for takeover targets. consider the defense industry. we have a ton of earnings reports coming out later this week. the one thing you need to know is that everybody is worried about the budget cuts. when congress reached its deal they postponed the defense cuts by a couple of months. now they are wrangling about how to replace the cuts. this is not going to happen. i do believe that we are going
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to spend less on defense. that creates a tough dynamic for the big defense contractors, and i thought about this yesterday. this is just an ongoing dilemma for these people. however, these companies do have a lot of money and their balance sheets are generally in terrific shape. if the big defense contractors want to grow their earnings per share, the way to get there is by making earnings in their business. if the big defense contractors are on the prowl, what could be a smart takeover target that is worth investing in? how about atk? this is a $2.15 billion company, so it is not that big, it could
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be swallowed, that goldman sachs upgraded and even said in this report that it is a potential acquisition candidate. it deals in lead. it makes small and larger caliber ammo and rocket motors integral to the new defense department. beyond that it has an aerospace division. they make rocket propulsion and satellite components. the company has a sporting goods division, with ammunition for sporting and law enforcement, along with shooting accessories. now whatever you think of guns the stock we know that people are owning guns at alarming
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rates because they fear the legislation and if people are buying more guns they are buying more ammunition and accessories. the acts of senseless violence you have seen in the news including the one today, makes this a hard stock to talk about. i am asked multiple questions every day about the gun stocks. i refuse to answer them, but i do understand that profiting from a military play is a pretty healthy situation for that contractor even if it is bad for the country. if it bothers you, i can see how this stock would turn you off.
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don't walk away as a statement. instead, if you want to make a difference, own the stock and then donate the profits to a charity of your choice. which is what i did with altria. i did give a lot of money away to fight what they do. because of a robust defense orders and the need for defense companies to grow, i believe it is going to go higher. the latest quarter reported back in november was fabulous. 41 cent earnings beat. the company has a $6.4 billion backlog and had a book to bill ratio of 4.2 and management raised its guidance for 2013. they boosted the dividend and that size dividend hike is an extremely bullish statement by management. they believe the business is
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going to get better. do you know that is the equivalent of 9% of the market cap? this is a serious chunk of what is traded, is what they're trying to buy in. the shortage here is what is coming. they have a major contract with the army. it could be worth at least $2 billion and they want a deal with the navy. they have orders from airbus for the military cargo plane. this is a defense business and one that is in excellent shape and only getting better. the fact is even though atk is at its 52 week high, i think the stock is real cheap and it has
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become a dramatic underperformer so it is high now, but let's go back to the generational low in march of 2009. since then it has doubled more than 100%. but aliantech is down, trading at a 37% discount to its five year average. while the stock has run over the last month, it is still at a depressed level and a larger defense contractor could snap them up for a pittance. if aliant tech got taken out, the company would be valued at $6.3 billion, 123% increase over atk's current value. i'm not saying that the stock would double. but it looks very, very attractive.
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but if the stock were to trade up, it would be worth $72. here is the bottom line. it gives you multiple ways to win. i think it is an obvious takeover target. but even without a takeover the fundamentals in the defense business are in very good shape and i think it is too cheap to ignore. let's go to rick in florida, rick? >> how you doing sir, booyah from down here in orlando. >> nice. that real estate market has come back with a vengeance. >> we can do real estate some other time. i mean this is a good producer
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and decent. it is hovering around $48 for quite some time. but i have been noticing they are getting these contracts not just government entities but they have streamlined their acts. is it a good buy at this price? >> it is an exceptional buy. we featured this stock in 2009. november of 2009. i think this stock has many, many, many points that it could run. i would like to see the company take some drastic action and break itself up if it doesn't get moving. i think you have a winner. i would own harris. dana in california, dana. >> i was hoping to revisit an old friend that you first mentioned when obama was first elected. avav.
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be kick it is kind of traded in a range between $25 and $35. it goes down and back up again. kurt >> yes, and what is interesting it, it has had a very spotty earnings record. it has had that up and down pattern. i liked the company but i did not help people by recommending it. it is a bouncing ball. down here, i don't know. you would have to have conviction that the earnings can be really good. i expect 2013 to be full of m and a action. that is something that the defense sector is going to be concentrating on. without a takeover, the stock is very, very cheap.
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it is time for the lightning round.
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i want to start with eric in california. >> my ticker symbol is rh, what do you think about that? >> people don't like this stock and i do. a terrific play on housing. i want to own it. if it disappoints i want to buy more. let's go to jim in florida, jim. >> dr. cramer i presume. anyhow, i got a problem now, bad disease and suddenly the stock has tripled in big volume. acadia pharmaceutical. >> parkinson's a bad disease. you want to buy buy buy. ross in new york. >> i wanted to know your thoughts about this stock i invested in. >> k2 interactive. >> come on, man.
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the whole group is bad. i don't want you in that. i think you should sell it. peter in arizona. >> what is going on? >> okay. citigroup is okay. cut i'm not going to rave about it. and that is the conclusion of the lightning round. >> coming up, packaging power. food, fashion, phones, whatever you consume usually comes in paper or plastic. tonight, jim is unveiling two names you probably never heard of, just ahead. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves...
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always searching for bull markets. not just the loud ones. sometimes, the quiet ones. the bull markets get a lot of media attention. sometimes the best bull markets are the ones that are under the radar. suddenly you look over and some boring stock you never heard of has made a new high after a new high after a new high. i don't think anyone in the audience has thought about it. i'm talking about the stealth bull market in packaging. specifically, food packaging. the industry has been on fire in recent months. if you are a food company, you know that new packaging can drive sales that allows the food to last longer. and in this business it comes down to two companies that you've likely never heard of.
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bms, often joked about to stand for buy my stock, a longtime leader in packaging, and berry plastics group, which came public last october. ips down 5% on its last day. since then the stock became red hot. if you go back two months, berry is up 25%. bemiss has rallied over 10%. i think they continue to outperform, courtesy of the quiet packaging bull market. buy buy buy. designing plastic containers doesn't seem like it would be a particularly sexy business.
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but both bemis and the other have been vanishing from the low market commodity side of the business. what these companies do is proprietary. they develop better kinds of packaging. they come up with new fabulous ways to package old products. here is a great example. you know these heinz dip and squeeze ketchup bottles where you can either squeeze it out or pull the thing open so you can dip your food in it? these have been big sellers for heinz. the packaging didn't come out of the ether. it was made by bms. both of them are constantly developing new packaging technologies like the heinz dip and squeeze.
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these are still companies that make things out of plastic. their main input costs are declining dramatically. feed stock is dirt cheap natural gas. paper, ink, aluminum, that is because there is not a lot of inflation. that natural gas decline is oolala. if you want to play the silent bull market in packaging, which is better? bms or berry plastics? this is one of those not so rare cases where i definitely like both stocks. the real question here is not which one is the better buy. it is which one is more suited to your investing style. the stocks both have interesting characteristics. if i tell you that berry
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plastics has the most upside, they could go wrong, but very badly. bemis is a very conservative stock, excellent mix of clients and a solid dividend, i have seen the stock yielding 3.5% because people didn't recognize what was developing. the company came public and it became a dud and people fled from this thing. it fell as low as $14 and change. it is only a point and a half below the ipo price. there is an opportunity here. now berry takes a tech or pharma like approach. the company has an impressive rd operation. including a major design facility in indiana where berry
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can create a prototype using that cool 3d printing technology in a single day. something that should help the company win many more contracts we love 3d printing. now berry is already the number one or number two player in the market. they have a terrific client list. kraft, nestle, procter. they have become a more profitable company focused on flexible packaging, a tech company, and on top of everything else, they have developed a revolutionary company and the cups that you probably drink your morning coffee out of. they were made of natural gas.
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berry also has issues. for starters the company has a hideous balance sheet and of that $2.1 billion, if it can clean the balance sheet, i think it can, the earnings will get a big boost. when you see a bounce like this one, i have to say it is a serious risk. the business gets worse and there is another problem. apollo still has controlling interest. and if they decide to sell, it could crush the stock. these two negatives, despite having a 13.5% growth rate. there is an element that is inexpensive. however, it might be too risky for you. if it is, go with bemis. it is a leading player and has
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the highest exposure in the industry. the company has been cutting costs aggressively. hillshire and hormel all gave positive commentary where volumes were headed and that is excellent for bms. this stock, it's not beyonce. you can sleep at night knowing the balance sheet is clean and the dividend is there. here is the bottom line. the quiet bull market won't stay quiet for long. they are going to notice it. i'm giving you two ways to play. berry and bms, for a more conservative name. "mad money" is back after the break.
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>> coming up. it was the rant heard round the world. >> they know nothing. >> but more than five years later do they finally know something? ♪ ♪ [ male announcer ] it was designed to escape the ordinary. it feels like it can escape gravity. ♪
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back in august of 2007, when i went on my famous rant, i had one goal in mind -- cut interest rates. >> he has no idea what it is like out there. and bill poole has no idea what it is like out there. for 25 years and they are losing their jobs and these firms are going to go out of business and they are nuts, they are nuts they know nothing. >> i didn't know it at the time but i succeeded in getting the fed's attention after all. except it wasn't the kind of attention i sought. i became a laugh line at the subsequent meeting. look, i certainly didn't intend to go ballistic when i started. if you watch the whole episode, i was fairly subdued. i got going with how ben
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bernanke knew nothing and how fed voting member william poole knew nothing because erin burnett pushed the wrong button. because we all know now that if the fed had cut rates at the time, we might not have had so many financial institutions go under. but i don't mention this to show how right i was or how wrong they were. although the cruel irony of their laughing at my performance was galling. i am confused to this day about how my contacts could have been so much better than their contacts. how could the feds not get it better than this one commentator?
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doesn't it say that it could happen? how could i get it so much more right than the fed did? i have some theories. some are reluctant to tell the truth, for fear that it could haunt them in the fear of regulatory action. it could shake confidence. which even in the best of times, could be an issue. finally i think they speak to their own people. maybe the big shots like jeremy irons in "margin call", the best movie made have wall street, even went out on the score. you don't rant every day, i was amazed that my comments were met with such instant derision. the feds never reached out to me, even the lowest levels. you would think that they would
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be more curious. in fact, before the minutes came out, the treasury secretary tim geithner acknowledged that i got it right and the fed got it wrong, i learned anyone heard what i had to say. but the bottom line is clear, all i really did was manage to bring a little levity to a clueless set of people who should have known a lot better. just like no one in the corrupt portion of the mortgage industry was ever pursued by the authorities. no one in that room had to pay any price for getting it wrong. my legacy will be simple. he who laughs last, laughs best. stick with cramer.
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